The Blog

Musings on corporate finance, fund raising, capital markets and other matters

Recently, one of Altimapa’s funding partners for SMEs interviewed our founder, Pedro Tavares, for a publication.

Here is a transcript of that interview, where Pedro answers some questions about our mission, the unique features of the direct lending market and the process of fundraising for a SME.

Tell us about what Altimapa Capital does?

At Altimapa our aim is to help businesses raise the funding they need, identifying the right way for them to go about it and helping them to execute the transaction. Before setting up Altimapa I spent several years working for investment banks, in risk analysis and with large corporates raising money. We do very much the same thing, but on a smaller scale. Nonetheless the standards are the same.

Where do you specialise?

We’re entirely focused on debt solutions. We’re looking for SMEs with an established customer base and revenues, ideally profitable or close to it, and now looking to scale up. These are businesses that will typically already have annual revenues of between £5m and £50m.

How much help do SMEs need with finding finance?

Very often, our clients have a good idea of what they want to do and the kind of funding they need to achieve their aspirations, but they’re not sure where to find it. The private debt market in Europe is relatively new and very fragmented, which can make it very difficult for fast-growing SMEs to find the right lender for their business; capital is available, but it is not always obvious where.

Is that where the broker comes in?

Yes – the first job, once we agree that a business is suitable for funding, is to find the lenders that will be appropriate for their needs and profile, and there’s probably only going to be a few of them out there.

What’s the next stage?

Raising money in this way is very different to negotiating with the bank, which is likely to know its business customers well because they’ll have had a period watching the money come in and go out; by contrast, we have to do a lot of educating when dealing with the private debt market, helping both sides to get to know each other better, so that they get to a stage where they are comfortable working together.

What are private debt investors looking for?

There are probably going to be some specific criteria around revenues or scale, say, and a strong asset base can sometimes be an important attribute. But what investors are typically most interested in is the quality of the management. Of course, they want to see the business’s track record and hear about its plans for the future, but the key question is generally whether the management team has the right capabilities to scale up the business.

What should businesses be looking for from their investors?

Again, the big issues aren’t about specific metrics or yardsticks – there’s an instinctive thing about whether you want to work with a particular partner. As for the specifics, our job isn’t to advise clients whether or not to accept a particular funding offer, but we do have the expertise and experience to guide them through the pros and cons of the terms, and to point out where the pressure points might be.